Judge Zaps FTC for ‘Unnecessary Overreaching’ Against POM Wonderful

Written by William I. Rothbard on Wednesday, June 6th, 2012

As previously noted in this space, the current, hyper-aggressive Federal Trade Commission (FTC) has been flexing its muscles and testing the limits of its power in ways that have heightened regulatory risk for the online and direct response marketer. This has included fundamental changes in settlement policy, abandoning an historical willingness to negotiate money judgments in favor of uncompromising demands for all assets (or “see you at trial”), and affiliate marketing consent orders that impose monitoring requirements so severe as to amount to a de facto ban on the practice.

It also has included jettisoning the traditional “competent and reliable evidence” substantiation standard in dietary supplement consent orders (i.e., the recent Iovate case) in favor of a rigid, controlled human clinical study requirement for weight loss claims and an “FDA approval” requirement for disease treatment claims.
The FTC has largely had its way with these major policy shifts – until now.

On May 17, in an “Initial Decision” in an FTC administrative action brought against POM Wonderful, the pomegranate juice and supplement maker, the trial judge, while finding that some of POM’s heart disease, prostate and erectile dysfunction claims were deceptive, rejected the FTC staff’s contention that “competent and reliable evidence” must include, as a matter of law, “well-designed, well-conducted, randomized, double-blind, placebo-controlled human clinical trials” (RCTs) not only for “establishment” (i.e., “clinically proven”) health claims but for all health claims. The judge ruled that “neither the FTC Act nor applicable case law imposes a requirement of RCTs to substantiate all ‘health-related efficacy claims…’ and that the appropriate level of substantiation is a “question of fact” to be determined by expert testimony. He also rejected the FTC lawyers’ request for an FDA pre-approval requirement for future “unqualified” disease treatment claims.

The judge held RCTs weren’t necessary, and that other forms of evidence could suffice, because the POM products were safe and were not offered as an alternative to medical care. Noting that RCTs are “prohibitively expensive” and “not feasible” in a “nutritional context” (vs. drug testing), and that an RCT requirement for all health claims could suppress valuable consumer information, the judge said the law and the First Amendment favored “disclosure,” especially where the product is safe and is not recommended as a medical substitute. Similarly, he described the FTC’s proposed “FDA pre-approval” requirement for disease treatment claims as “unnecessary overreaching,” since it was not supported in the case law and exceeded the “established precedent” of the “competent and reliable evidence” standard.

While the judge rejected RCTs as a mandatory substantiation standard, he said the POM disease claims did require “clinical studies,” just not the very costly form used in drug trials. This is potentially welcome news for DR marketers of weight-loss and other supplements, as it could give them some new “ammo” with which to argue to the FTC that less rigorous clinical studies, not only on their products but on the active ingredients found in them, satisfy the “competent and reliable evidence” test.

Or will it? The Initial Decision can be appealed to – who else? – the full FTC, by either POM or the FTC staff, or on the Commission’s own motion. Assuming an appeal is heard, it will be fascinating to see whether a majority of the commissioners uphold the judge or, junking “established precedent,” build on the non-binding Iovate consent order with a final adjudicated decision that imposes a controlled human clinical study requirement for all health claims. Should that occur, the story won’t end there. You can be sure POM, and its billionaire owners, will appeal to the U.S. Court of Appeals and, from there if necessary, to the Supreme Court.

Will the FTC have its way in the end or not? Will nutritional supplements remain a product that DR marketers can afford to sell? Stay tuned.